Interestingly, the total number of firms registered with FINRA continues a slow trend of decreasing, possibly indicating consolidation among firms in the industry. Additionally, there is an increase in the median length of time in business for firms registered with FINRA, from 14.4 to 19.4. This may indicate the industry consolidation favoring firms with a longer number of years in the business.
This summer FINRA released its industry snapshot for 2024. This report provides a solid overview of changes in the industry over the last year. Financial advisors may want to keep an eye on any trends.
FINRA publishes a snapshot of the industry every year as a way to educate the public. As it says, the report “provides a high-level overview of the industry, ranging from the number of FINRA-registered individuals to the overall revenues of firms, and from trading activity to how firms market their products and services.”[1]
One notable trend is a restoration of the number of registered agents. In 2016, FINRA reported there were 635,625. And, in 2024, that number was close to the same at 628,392. By 2021, that number had dipped to a low of 612,457 (or a 4% reduction of the total number of agents).[2]
Another notable development is that after years of there being more registered agents who were only registered with FINRA as broker dealers than those registered with both FINRA as broker dealers and investment advisors in 2023 those numbers reached approximate parity at just above 300,000. This was due to modest decreases in the number of broker-dealer only representatives and modest increases in dual representatives. This indicates a trend that may soon see dual representatives outstripping those listed as broker dealers only with FINRA. This could also be due to the trend towards more individuals entering the industry. However, the trend of firm registration may point to a different conclusion: the slow trend of increasing numbers of investment advisor only registrants with FINRA seems to have peaked. This may indicate a change in industry.
According to FINRA data, the number of individuals leaving FINRA reached an apex in 2009 and then came to approximate parity with those joining FINRA until the last two years of data, 2022 and 2023, where those joining FINRA began to surpass those leaving. This seems to not have been dependent on the pandemic. Other data does show pandemic-related changes to the industry, specifically the number of transfers of a registered agent between firms. That number dropped precipitously in 2020 but seems to have corrected since then. Those transfers also did not, for the most part, involve a change in registration type, e.g., from a dual registration to an investment advisor only.
The distribution of firm size in FINRA membership remains constant, with large firms continuing to vastly outstrip small and mid-size firms in terms of membership. Interestingly, the total number of firms registered with FINRA continues a slow trend of decreasing, possibly indicating consolidation among firms in the industry. Additionally, there is an increase in the median length of time in business for firms registered with FINRA, from 14.4 to 19.4. This may indicate the industry consolidation favoring firms with a longer number of years in the business.
The rate of growth appears to be consistent across the United States, at approximately 30,000 to 40,000 representatives gained between 2019 and 2023 with a few standout states. These include South Carolina with a gain of approximately 46,000, North Carolina at approximately 45,000, Tennessee at 51,000, and Texas at 49,000. This trend may reflect a greater tendency for retirees to move to the South and Southeast, over other states, such as Arizona or California.
[1] https://www.finra.org/rules-guidance/guidance/reports-studies/2021-industry-snapshot
[2]Compare https://www.finra.org/sites/default/files/2022-02/21_0078.1_Industry_Snapshot_v10.pdf with
https://www.finra.org/sites/default/files/2024-07/2024-Industry-Snapshot.pdf
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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